Table of Contents
What does the isocost curve represent?
A curve showing the combinations of factor inputs that have constant market cost. If firms are acting as price-takers in factor markets, the isocost curve is a straight line, whose slope represents the relative prices of different factors’ services.
On which assumption ISO-product curve is best?
Assumptions of Isoquant Curve Only two inputs (labor and capital) are employed to produce a good. There is technical possibility of substituting one input for another. It implies that the production function is of variable proportion type. Labor and capital are divisible.
What are ISO-product curves explain producer’s equilibrium under ISO-product curve analysis?
These lines represent various input combinations which produce the same levels of output. The producer can choose any of these combinations available to him because their outputs are always the same.
What are the differences between ISO-product line and ISO cost line?
Isocost curve is a producer’s budget line while isoquant is his indifference curve. Isoquant is also called as equal product curve or production indifference curve or constant product curve. Isoquant indicates various combinations of two factors of production which give the same level of output per unit of time.
What is an ISO cost line an ISO profit line?
Iso profit or Iso cost method for solving LPP graphically. The term Iso-profit sign if is that any combination of points produces the same profit as any other combination on the same line.
What is ISO Quant and ISO cost?
An isoquant shows all combination of factors that produce a certain output. An isocost show all combinations of factors that cost the same amount. Isocosts and isoquants can show the optimal combination of factors of production to produce the maximum output at minimum cost.
What is producer’s equilibrium explain?
A producer’s equilibrium refers to the state where the combination of price and output gives maximum profit to the producer. By producing any more goods than the equilibrium state, the producer’s profit would begin to decline.
When the total product curve is falling the?
| Q. | When the total product curve is falling, the: |
|---|---|
| A. | marginal product of labor is zero |
| B. | marginal product of labor is negative |
| C. | average product of labor is increasing |
| D. | average product of labor must be negative |
What is ISO profit method?
The graph of the profit function is called an iso profit line. It is called this because iso means same or equal and the profit anywhere on the line is the same. So, an iso-profit lines represents an infinite number of solutions all of which yield the same profit.